Tenants, bank customers merit much better terms

A Member of Parliament plans to table two private motions in the National Assembly this month meant to safeguard the rights and interests of tenants and bank customers.

The first motion seeks amendments to the Financial Consumers’ Protection Act that will ensure enough control of the financial services provision system to protect the rights of customers. The second demands amendments to rental laws.

The MP told journalists at the weekend that there is neither a specific law protecting bank customers’ interests nor a special system capable of handling violations of their rights.

A superficial look at the financial services sector in Tanzania will show that things are by and large fine but, as correctly observed by the MP, more ought to be done to ensure customers a fair deal.

For instance, there is no law protecting them against sporadic rises in interest rates, borrowing and loan repayments, and disturbances encountered by retirees in getting their benefits.

There are also the cumbersome procedures experienced by loan-seeking students and accident victims when it comes to payment of their insurance dues, to mention but a few cases.

Though the financial sector has vastly expanded in recent years, thanks to reasonably noticeable growth in the economy, it does not correspond with the related control and coordination measures taken to improve services delivery.

There has been an increase in the incidence of frauds, injustice, inefficiency and inconvenience caused by some financial service providers, sometimes leading to chaos.

Sadly, while these institutions are protected by the Banking and Financial Institutions Act of 1991 (as amended), they are not as fully tasked to protect their customers.

Rental laws constitute one of the areas where there have been serious problems between the landlords and tenants and with respect to economy generally.

Contracts entered between the landlords and tenants are seldom registered, while many tenants are forced with impunity to pay monthly or annual rental fees in advance, sometimes in foreign currency.

Perhaps what the MP overlooked is that this system of paying rent in lump sum, sometimes for three or more years in advance, does not only deny the government revenue but stagnates the economy by making the circulation of money hard to monitor or regulate.

Few tenants can accumulate enough rent they are required to pay for three years at once and some of those who able to do so can hardly undertake of any meaningful economic ventures.

Indeed, the practice does not only stifle competition but is anti-competition. Even worse, it concentrates money in the hands of a few property and service owners.

This is bad especially in that most residents of urban areas in Tanzania live in rented houses and, according to the Tanzania Tenants Association, spend some 40 per cent of their income on rental charges.

The picture is wrong and unacceptable especially given that the services sector, particular banks and other financial institutions, now account for between 45 and 60 per cent of the country’s GDP.

A thorough review of the relevant laws could help in improving things because most of what we are seeing are sure brakes to economic growth.